Sri Lanka’s decision to issue a certificate of origin for any pepper being exported from the island nation may add to the woes of Indian planters, particularly in Kerala and Karnataka, the largest growing regions in India, which are still reeling from the recent floods.

Indian growers allege that the decision to to issue a certificate of origin even to pepper-carrying containers passing through Colombo Port would lead to an influx of Vietnamese pepper, which has a high level of pesticide residue. Making matters worse, the pepper will be brought into India by paying only 8 per cent duty under the South Asian Free Trade Area (SAFTA) pact, thereby impacting domestic prices further. The import duty on commodities from the Asean bloc, of which Vietnam is a member, is much higher, at 52 per cent.

While the Sri Lankan move has caused concern, associations representing Indian growers and another representing exporters have put forth different suggestions on how to address the problem.

Kishore Shamji of the Indian Pepper and Spice Traders, Growers and Planters Consortium, Kerala Chapter, wants imports from Sri Lanka to be slapped with the standard import duty of 52 per cent for Asean countries or 70 per cent in general to safeguard Indian pepper growers.

He apprehends that even Brazilian black pepper may now find its way into India via Sri Lanka, evading the normal import duty of 70 per cent. Shamji alleged that Vietnamese pepper has started arriving in the Indian market through the Tuticorin, Chennai and Krishnapatnam ports,

India has a Minimum Import Price of ₹500/kg for black pepper (approximately $7,200 per tonne). But the policy change in Sri Lanka is expected to provide the Exim trade there $4,400 more per tonne, Shamji said, citing that purchases of such pepper are being made at ₹200 per kg, which translates to a price of $2,800/tonne.

The emerging scenario, he said, would worsen the domestic market situation when farmers are confronting lower production, loss of stocks and vine damage, among other issues. The domestic price of black pepper is now hovering at ₹380 for the un-garbled variety and ₹400 for the garbled kind. At $2,800/tonne, the imported pepper costs barely ₹200 a kg.

As per the Pepper Task Force Committee meeting, production of pepper, pegged at 70,000 tonnes in 2018, will plummet to around 45,000 tonnes in 2019 because of the destruction caused by the floods in Kerala and Karnataka. This is well below even the 2017 level, when production stood at 57,000 tonnes.

Exporters’ view

Prakash Namboodiri, Chairman of the All India Spices Exporters Forum, feels that it is Sri Lanka’s prerogative to make changes to its import-export policy and that the country has probably done so because of a clear opportunity. “If that happens (pepper from countries other than Sri Lanka comes into India), we feel that the pepper should not be labelled as being of Lankan origin. Lankan origin pepper is known for its light berries and high volatile oil content, making it best suited for the oleo industry for extraction purposes. The majority of these units are located in the southern part of India,” he said.

The Union Government could bring the situation under better control by making it mandatory for all spice importers to be registered with the Spices Board, he said. This would enable tracking of the movement of pepper and also curtail the flow of imported pepper into the domestic market, said Namboodiri.

Nishant Gurjer, Chairman of the United Planters’ Association of Southern India’s Spice Committee, said pricing would come under pressure from cheap imports. He also stressed on the need to allow in only pepper that is safe for consumption. “We have been requesting the government to ensure the entry of genuine Sri Lankan pepper, which is fit for import. The pepper that enters the market has to be analysed for various types of residue and allowed to enter only if these are found in permissible limits. All this has to be carried out in a proper and regulated manner,” he added.

He said the change of policy in Sri Lanka in issuing a certificate of origin would not make any difference in business dynamics as Sri Lankan pepper is already in the Indian market because of its oleoresin content, a prerequisite for the crushing industry. Now, with certificates of origin, import of pepper would become rampant, he feared. There is already a glut in the market, he added, noting that apart from India, many other countries produce black pepper.

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